Article excerpt

If Cuban authorities have their way, this quiet port an hour
west of Havana will soon become a center of international commerce,
the first free-enterprise zone in this Communist country.

Manuel Pacheco, a technician in the town of 20,000, can't wait.

"For 30 years we've had a Soviet-style economy," he said,
sitting in a rocking chair on his porch. "Now we need to have
elements of capitalism in order to solve our problems."

Today, the country's economic health depends on foreign
investment. But US pressure, especially the Helms-Burton Act,
which targets foreign investors in an effort to force democratic
reforms in Cuba, has begun to take a toll on an economy already
made stagnant by President Fidel Castro Ruz's policies and the loss
of trade with ex-Communist nations.

To avoid collapse, Cuba has moved in recent years to allow
foreign investment, self-employment, and the possession of dollars.

The proposed free-enterprise zone for foreign investors and
traders is the latest evidence so far of Cuba's move toward a mixed
economy. But a dependence on foreign investment has made the Castro
government more vulnerable.

Despite continuing American pressure, Cuba has little choice but
to continue to try to attract foreign investment, which has reached
$2 billion, according to official statistics.

The acceptance of free-trade zones - once seen as a symbol of
capitalist exploitation - suggests the extremes to which Cuba is
now willing to bend its communist principles in its attempt to woo
foreign investors.

Under the Law for Free Trade Zones and Industrial Parks,
approved last month by the Cuban legislature, maritime, commercial,
and industrial zones are being considered. Companies that set up
factories in free-trade zones will be granted the right to ship raw
materials into Cuba, assemble them using Cuban labor, and export
them tax free.

With a highly educated work force and basic wage of about $10 a
month, the Cuban government is confident that the proposal will
take off. Mariel residents say that the government is planning to
build a massive complex of warehouses, shops, and factories. Cuban
officials, meanwhile, have kept mum about their plans.

BUT questions remain whether investors will flock to Cuba, given
the economic climate created by the Helms-Burton Act. Congress
passed it after Cuban MiGs shot down two civilian planes in
February. The law targets foreign investors in Cuba who profit from
properties expropriated from American citizens or companies after
Castro took power in 1959.

"The Helms-Burton law will slow our economic growth, but it will
not push back our recovery," Cuba foreign relations official Carlos
Fernandez de Cossio said. …